Ultimate Account Blog

What Businesses Can Learn From Baseball Fundamentals

business decisions

 

Ted Williams, the accomplished Boston Red Sox left fielder may be more famous to current generations for his connection to cryogenics, but for people who saw him play in the 1940s and 1950s or heard him talk about his own career later in life, he is known as “The Greatest Hitter Who Ever Lived.”

Williams wrote about his acumen for his craft in an excellent book called The Science of Hitting. This blog post is not about baseball, or even the Splendid Splinter himself; it is about how Williams credited his success. He said that the most important thing to hitting was getting a good pitch to hit.

Seemingly simple, Williams approach is quite profound. One of the hardest feats in athletics is hitting a round ball with a round bat squarely, yet the greatest hitter ever didn’t think that the most important thing to hitting was an appropriate swing plane or specific stance or even anything technical. The principal aspect, instead, was putting oneself in a situation to succeed. Without a good pitch, it doesn’t matter how proper the stance or how good the swing, success is not likely.

This fundamental approach, making sure that a situation is set up for success (i.e. a good pitch) before acting (i.e. swinging the bat), can be applied to almost anything, but especially in the business world.

When making a business acquisition, some prospective buyers will be so focused on adding to their business, they will not consider all of the possible pitfalls associated with a new entity, most specifically if it can be profitable. Entering into a sizable transaction merely on the hopes that it will make money will frequently lead to difficulty for the company.

Similarly, businesses often branch into a new service area without proper planning. The concept of expanding the reach of the business is so appealing that all of the due diligence needed is too often handled quickly or insufficiently.

One other trap that business owners can fall into is relying on a significant annual return on investment beyond their normal salary. Needing to pull money from the business in the form of a bonus or a distribution to pay for recurring personal expenses like a mortgage payment can hamper the equity of the company, especially in a down year. Relying on these funds turns discretionary income into mandatory income and marginalizes the needs of the business.

Companies and owners who commit these faults did not plan to struggle after making their decision, but the problem is that they went up to the plate ready to swing at the first offering instead of waiting for the right pitch.

Ted Williams, despite being the game’s best hitter, still led his league in walks – getting on base without swinging the bat – eight times. In those cases, he did not get a good pitch to hit. Instead, he let the bad pitches go by, earned his way to first base and looked forward to the next time at bat. Many times a similarly patient and discerning approach can serve a business well.

 

By Dan Massey, CPA, Manager

Dan Massey, Walz Group, Ultimate Account Blog

Leave a Reply

Your email address will not be published. Required fields are marked *